The move lifted European stocks and pressured the euro. The Stoxx Europe 600 index ended the day 1.14% higher while the euro dipped below $1.30 -- its lowest in 14 months. In an effort to bolster Europe's patchy economic recovery and counter deflation, the ECB cut its refinancing rate to 0.05% from 0.15% and pushed its deposit rate further into negative territory, dropping it to -0.2% from -0.1%.

Draghi offered at least a passing nod toward QE. The ECB plans to buy asset-backed securities and covered bonds and said the central bank's governing council had considered launching a broader asset purchasing plan.

Alpari analyst Joshua Mahony reckons QE will come to Europe: "Ultimately, with the growth of geopolitical threats, primarily driven by further sanctions in Russia, growth is almost certain to be on a downward trajectory and, as such, it is right to front-run such a move and attempt to prop up the economic recovery in the euro zone."

He believes the ECB's plan to buy asset-backed securities indicates a move toward QE. "The clear willingness of certain members within the governing council to push for such a measure means the expansion of the ECB balance sheet could be just beginning," he says. The ECB move also suggests that low rates and a weaker euro will be a feature in Europe for some time. That's good news for investors, especially those buying export-focused or high-yielding stocks.

Ibra Wane, senior equity strategist at Amundi, points out that exports account for 36% of sales by companies on the MSCI Europe index. Sectors with the biggest international exposure include luxury goods at 62% and pharmaceuticals at 57%. "These sectors will benefit if the euro stabilizes or declines," Wane says.

Meanwhile, dividend yields across the MSCI Europe index average 3.4%, a level that even before the ECB's latest move was considerably more attractive than the weighted average yield of 1.6% on 10-year euro-zone bonds. Europe's top-yielding stocks are insurance at 4.7%, with utilities at 4.6%. "You need international exposure to benefit from the euro impact and dividends to protect against deflation. It's important to be diversified," says Wane.

IN LUXURY GOODS, Nomura analyst Christopher Walker favors
Kering
(ticker: KER.France), which generates almost 70% of its sales outside Europe. This French family-controlled company owns brands that include Gucci, Saint Laurent, Alexander McQueen, and Stella McCartney. "Kering displays a range of attractive investment requisites such as brand initiatives, divisional growth, improving returns, good free-cash-flow generation and attractive valuation," he says.

He estimates that its price/earnings ratio in 2015 will be 15.2, supported by free cash flow of 5.5% and a dividend yield of 2.6%. He recommends it as a Buy with a 190 euro ($245.85) price target. The stock closed at €165 on Friday.

Walker also likes
Moncler
(MONC.Italy), an Italian apparel, accessories, and luxury-goods company. "Moncler is our key mid-cap pick for growth-oriented investors as the group continues to execute its strategy successfully targeting continued space expansion and [like-for-like] growth, helping to drive [earnings-per-share]," says Walker.

He says the stock is a Buy with a €14 price target, estimating the P/E ratio at 25.1 for 2014 and falling to 21.1 next year. Its stock closed at €12 on Friday.

Among European insurance plays, Berenberg Equity Research analyst Tom Carstairs includes Germany's
Allianz
(ALV.Germany) and Britain's
Prudential
(PRU.United Kingdom). "The stagnant European economy has seen cross-sector earnings downgrades while the equity market has continued to rise. The insurance sector has been de-rated by up to 10% relative to the market in 2014 to date, despite strong earnings resilience. We see that underperformance and de-rating reversing," he says.

He recommends Allianz with a price target of €153, compared with Friday's close of €133.2. "On earnings we believe consensus remains too low despite Allianz continuing to produce exceptionally strong results. For the second quarter, operating profit was again 7% ahead of consensus. Some one-offs contributed to this result but the underlying was also very strong," he says.

His Allianz dividend yield estimate for this year is a whopping 5%, rising to 5.1% next year, and 5.4% in 2016.

Of Prudential, which Carstairs also recommends with a 16 pound ($26.27) price target, he says: "While currency head winds perhaps took some of the gloss off Prudential's first-half 2014 results, underlying growth and performance continue unaffected. Excluding currency impacts, new business sales and profits rose 13% and 15%, respectively, while operating profits were up some 19%."

He estimates its 2014 dividend yield at 2.5%, rising to 2.7% in 2015 and 2.9% the year after. Its shares closed at £14.52 on Friday.

DIGBY LARNER, who is based in Paris, is a Wall Street Journal news editor in Europe, the Middle East, and Africa.

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